Overview of an Approve the Company’s Share Option Plan
What is a Directors’ Resolution to Approve the Company’s Share Option Plan?
A Directors’ Resolution to Approve a Share Option Plan is a resolution to be passed by the directors of a company to approve the adoption of an employee share option plan.
A Share Option Plan is used to reward the high-performing candidate by allowing them the right to buy the company’s shares.
A Directors’ Resolution to Adopt Share Option Plan grants the company the right to allow employees to buy the company shares once exercised.
How to grant share option plans to employees?
After the adoption of the share option plan, a company can grant options to individuals by issuing option certificates. The company must legally issue an “Option Certificate”, which sets out the terms and conditions of the ESOP. Additionally, it is also customary for the company to issue a letter for a grant of option as a cover letter. This provides more details regarding the procedures to follow for the exercise of the option by the employee.
How to approve the company’s share option plan using the director’s resolution?
There are two options when using a Directors’ Resolution to Adopt Share Option Plan:
- If a meeting of the board of directors is convened to adopt the share option plan, use board minutes to adopt a share option plan: This should be signed by the chairperson of the meeting.
- If the board resolution will be passed by way of a written resolution, use a written board resolution to adopt a share option plan: This should be signed by all the directors.
What is a share option?
A share option is not a share. Instead, it is a right to acquire shares when it is exercised. Share options are usually “vested” over time or upon fulfilling certain conditions (e.g., performance targets, time periods). When the conditions are met, the option holder becomes eligible to exercise the right to acquire shares in the company.
What is an employee share option plan?
A share option plan is commonly used by companies to attract, reward, and retain talents. It is commonly known as an “ESOP” (Employee Share Option Plan). Essentially, it allows eligible employees to buy a certain number of shares at a price known as the exercise price. Then, these employees will benefit from the increase in value of the company by exercising their option to buy shares when the shares are at a price greater than the exercise price.
A Directors’ Resolution to Adopt Share Option Plan is a resolution passed by the directors of a company to approve the adoption of an employee share option plan for rewarding and retaining high-performing employees.
You Might Also Like
Along with this document, make sure you see these other templates in our library:
The Zegal Template Library
Zegal's template library represents a complete and curated list of essential and premium business templates that can be used directly, for everyday business needs. Importantly, whether you're a startup or a larger enterprise, you will find that our Zegal automation solution allows anyone to create a legal agreement, any time, anywhere. All without a need for an expensive lawyer. Why do we do this? Well, we think that running your business day-to-day is important, and having these templates at your fingertips allows you to not miss a beat!
Lawyers draft and curate all of our legal templates for ease of understanding using plain English. Just fill out our guided questionnaires, and we will create the contract for you. Using our patent-pending expert rules engine, we automate the creation of complex legal contracts.
Try it for free today!